Election Year Follies

You know how sometimes when you repeat a word over and over again, it starts to lose its meaning? If you listen to our current crop of presidential candidates, they're doing their best to do that with the most important word in this election: Jobs.

Unfortunately for voters, the fact that politicians make such comforting pledges on the campaign trail does not mean we're having a serious, coherent debate on the issue. Instead, we're being treated to a morass of slogans and glib promises. Given how crucial this issue is to most Americans, the electorate deserves a lot better.

So what should candidates talk about -- and what should voters watch for? A small dose of realism would be a start. Here's a modest proposal for a franker, productive debate:

Let's stipulate that fixing the jobs problem won't be quick and easy. It's probably in the DNA of politicians to promise more than they can deliver, but candidates who claim (or actually believe) that they have a foolproof recipe for creating jobs in this changing world economy are in fantasyland. The Obama Administration certainly didn't do itself any favors when its key economic experts projected that the stimulus would keep unemployment under 8 percent in 2009. The Republicans lambast the president as a colossal economic failure, but their glib assurances could leave them in exactly the same position some four years hence, should one of them get elected. We need to replace more than 8 million jobs lost in the recession and create millions more to keep up with a growing population. The government estimates we'll need jobs for some 167 million people by 2018, up from about 154 million today. We're way behind.

Let's stipulate that brisk economic growth won't be enough. You can't create many jobs if the economy is not growing nicely, but healthy economic growth and a good employment picture are not the same thing. Between 2000 and 2010, the United States had stretches of reasonably good growth, but job creation was lackluster. The country lost about as many jobs as the economy created. Jobs were eliminated by technology; jobs went overseas. The economy grew, but many companies can thrive with fewer workers, and they don't necessarily need for the workers to be here in the United States. This is a seismic economic shift. It's a challenge that will be with us for decades.

Let's stipulate that tax policy is not the be all and end all of the debate. Listening to the current political discourse, you could be forgiven for thinking that tax policy is the deciding factor in whether we have robust job creation or not. Tax policy matters, but so do many other things--technology and innovation, research and education, immigration, government spending, regulation, and the legal environment to name just a few. And the truth is that the United States has had historically low taxes since 2003, and the economy's ability to create jobs has pretty much been at a standstill. Economists and politicians will probably debate which tax policies are best for job creation until hell freezes over, but clearly cutting federal taxes and modifying the tax code is not the whole answer.

Let's start distinguishing between short-term and long-term solutions. The U.S. economy is still recovering, and the European mess is still very worrisome, so considering some quick fixes to spur job creation is entirely sensible. But we need to be frank about how long these strategies can be sustained and how much they really do to create new jobs. Maybe cutting payroll taxes for another year is a good idea, and analysis by the Congressional Budget Office, for one, suggests that these kinds of tax cuts are among the more effective job creation mechanisms. Workers have more money in their pockets, and plans that reduce the employer's share as well as the worker's can make it cheaper to hire, and that can promote job creation. But if we do this for too long, we jeopardize funding for Social Security, which has financial problems looming already.

Let's zero in on how to get new more new businesses started. Economists seem as divided as the rest of America on the best policies for creating more jobs, but there is compelling research from the Ewing Marion Kauffman Foundation suggesting that most new jobs come from new enterprises. It's perfectly logical if you think about it. New businesses are starting from scratch--whatever needs doing, they need to hire someone to do it. Existing businesses may expand or diversify--and that's good for jobs too--but when it comes to job creation, getting new businesses up and running is about as close to a killer app as we have.

There's plenty more to talk about--what we're suggesting here is just a nudge in a better, more honest direction. The United States faces a long and difficult transition on jobs. Rhetoric, no matter how compelling, just won't get us there.